Treasure Hunt in A...

Treasure Hunt in Agriculture Wastelands: Agribusiness Venture at TREC-STEP, India

Bharath Agro Products is a venture incubated at the Tiruchirappalli Regional Engineering College - Science & Technology Entrepreneurs Park (TREC-STEP), a member and grantee of infoDev's Global Network of Business Incubators and one of the winners at the Development Marketplace 2008.

Bharath Agro Products is involved in the manufacturing of a tractor-mounted pulverizer for collecting waste from Julie Flora, a common crop in several Indian states. The Julie Flora (known as Karu Velam in Tamil and Babool Tree in Hindi) is a firewood tree in dry lands across India. After collecting Julie Flora's thicker branches and stems for firewood, farmers are left with waste, such as thorns and small branches that comprise approx. 1/3 of the total crop size, on their land. This waste is then burned on the farmalands and causes pollution.

Mr. Kannappan, a mechanical engineer, and Mr. Paneerselvam, a farmer, decided to join their knowledge and skills in agricultural production practices and technologies and start their own company. Rather than leaving Julie Flora waste to burn and cause pollution, they wanted to find an innovative way for collecting and making use of this waste. Mr. Kannappan and Mr. Paneerselvam designed and fabricated a tractor-mounted pulverizer that would efficiently collect the Julie Flora waste and turn it into a product that could be sold to biomass power plants, boiler manufacturers and even major hotels' kitchens. This a unique product in the Indian market with no direct competition, which naturally offers tremendous market potential for Bharath Agro Products.

The tractor-mounted pulverizer can collect up to 5 tonnes of Julie Flora cut waste per day, which translates into the collection of almost 2/3 of available waste. As a result, the innovative pulverizer prevents the potentially enormous damage done by slash-and-fire systems to the fragile environments of India's dry farmlands - and provides an additional supply channel for energy producers. However, the use of tractor-mounted pulverizers across these Indian states is uneven and there is still much untapped potential due to the lack of investment in this product. The innovators rightfully claim that, in their resource-poor district alone, these machines have the potential to reclaim wastes worth more than Rs 50 million [approx. USD 1.1 million] every year. There are 604 districts in India and rough estimates say that more than 150 districts have Julie Flora waste: the wealth creation potential from harvesting this waste, due to the tractor-mounted pulverizer innovation alone, is more than USD 150 million. In addition to this, it has the potential of creating 120,000 jobs when operating at this level. Other benefits such as Carbon Offsetting to reduce carbon emissions are also significant. TREC-STEP believes that it is only a matter of time before this innovation capitalizes on its potential, resulting in wealth creation, jobs and environmental protection in rural villages.

This interview was conducted with Mr. Bindu, Deputy Manager of TREC-STEP, who is working closely with Bharath Agro Products to support their entry to the Indian as well as international markets.

"With the help of TREC-STEP, the company is confident that they will be able to convince more financial institutions to provide eco-consumer loans for their customers, namely rural unemployed youth. In addition to having a product that would make profitable use of crop waste, it can also positively impact employment opportunities in rural communities."

Mr. Bindu, Deputy Manager, TREC-STEP

How did Bharath Agro Products finance its start-up operations and how long did it/will it take for the company to become self-sustainable?
The entrepreneurs designed and manufactured the first three tractor-mounted pulverizers with their own funds, and harvested the cut waste by themselves. Once they came across TREC-STEP's advertisement on inviting innovative ventures to the business incubator, they approached TREC-STEP. As a result, TREC-STEP has provided various virtual business incubation support services to Bharath Agro Products, including support in developing a solid company vision for manufacturing and marketing their agribusiness product. TREC-STEP also supported the entrepreneurs in getting financial support from the Department of Scientific and Industrial Research of the Government of India, which in turn enabled the company to get the necessary certification from the Central Farm Machinery Training and Testing Institute. TREC-STEP is also working with National Banks to raise further funding. One of the National Banks already awarded an initial Rs. 2 million [approx. USD 40,000] in support of Bharath Agro Products, but later recognized the immense potential and value of the company and increased funding to Rs. 3 million [approx. USD 60,000]! To date, the company has already manufactured and introduced 10 tractor-mounted pulverizers to the market, with 15 more sales orders pending!

How was the tractor-mounted pulverizer launched to the market?
When the entrepreneurs initially manufactured and and operated three pulverizers profitably, they were able to demonstrate the success of the product and convince customers to purchase their machines as well as bankers to finance these customer purchases. There is also great interest among youth in rural communities to purchase this environmentally friendly product and start their own small venture through collecting and selling the cut waste to industries like paper, food processing, textiles and industrial boilers. However, bankers and financial institutions are are still hesistant towards providing the financial support to rural youth, because this is still a relatively new product on the market.     

How is the success of the company measured?
One key performance indicator is being able to work favorably with financial institutions. With the help of TREC-STEP, the company is confident that they will be able to convince more financial institutions to provide eco-consumer loans for their customers, namely rural unemployed youth. In addition to having a product that would make profitable use of crop waste, it can also positively impact employment opportunities in rural communities.

To meet market demand, Bharath Agro Products is planning to bring out 100 tractor-mounted pulverizers in 2009, and is in the process of designing similar, innovative agribusiness products. The company is reaching out to users through print and media advertisements, as well as participation in relevant exhibitions.

What was the biggest challenge in starting this innovative business in your country and how did you overcome that?
Getting financial support for our customers for purchasing our machine is the biggest challenge. Each machine costs nearly Rs. 1 million [approx. USD 20,000]. According to our calculations, customers would see a return on their investment within 12 to 18 months. Therefore, TREC-STEP is helping Bharath Agro Products to approach several banks and financial institutions to convince them about the value of the tractor-mounted pulverizer and raise the necessary financial support for their customers.

How has Bharath Agro Products benefited from business incubation?
The TREC-STEP team had several rounds of discussions with Bharath Agro Products to provide the necessary impetus, confidence and venture vision to start the company. As mentioned earlier, TREC-STEP has supported the venture in getting financial support from the Department of Scientific and Industrial Research of the Government of India, and in receiving the necessary certification from the Central Farm Machinery Training and Testing Institute. TREC-STEP is also continuously approaching relevant financial institutions to request funding support for rural youth in purchasing the tractor-mounted pulverizer.

To advance the entrepreneurs' business skills development, Mr. Kannappan and Mr. Paneerselvam have attended the New Venture Management Programme organized by TREC-STEP, which was carried out with support from the Information for Development Program. TREC-STEP has also provided the entrepreneurs with various networking opportunities with government officials as well as national and international experts on entrepreneurship and start-up development. These introductions and networks have been very important for the venture in its growth phase. 

The venture has received virtual incubation support from TREC-STEP, which includes mentoring, marketing, networking and training support, and has not needed a physical incubation space at the business incubator. Overall, TREC-STEP has acted as a dynamic networking platform for various essential venture growth needs such as technology, marketing, management expertise, training and venture funding. 

What is your message to supporters (financial or otherwise) and what is your message to the users of the product?
Eco-consumer loans for the rural youth for purchasing the tractor-mounted pulverizer would immensely benefit the rural community and the environment. Bharath Agro Products is planning to scale up its operations for catering to the increased demand for its product. We are on a constant look-out for potential funding agencies and attracting investment for the expansion of Bharath Agro Businsess activities.  


Please login to post comments.